U.S. Helium Shortage: Economic and Policy Issues

Helium-3 is a rare non-radioactive isotope. It is a byproduct of making nuclear weapons and possesses many applications. In the U.S. these applications include contributions to homeland security, national security, medicine, industry, and science. Helium-3 can absorb neutrons which makes it a great tool for neutron detection. Neutron detection is a vital component for security and science. The federal government uses radiation portal monitors and other neutron detectors at the U.S. border to prevent smuggling of nuclear and radiological material, and the oil and gas industry uses neutron detectors for well. Natural gas reservoirs typically contain significant amounts of helium and supplies often extract it in order to increase the energy content of their gas and improve it combustion. When a reservoir is relatively helium-rich, it can be economic to purify the extracted helium and sell it as a commodity. In fact, natural gas is the primary commercial source of helium (Shea and Morgan 2010). Due to our ability to polarize its nucleus, Helium-3 can also be used for magnetic resonance imaging (MRI) where technicians are able to see real-time visualizations of patients’ lung capacity and capability. Additionally, it has unique cryogenic properties that allow it to be converted to a superfluid.


Currently, there is a worldwide helium shortage that is posing challenges for many policymakers. Federal officials claim that the shortage is acute and, unless alternatives are found, will affect federal investments in homeland security, scientific research, and other areas. Directly after 9/11 the federal government began deploying neutron detectors at the U.S. border to help secure the nation against smuggled nuclear and radiological material (Shea 2010). This resulted in a new increasing demand for Helium which than caused stockpiles to shrink. Because Helium-3 is produced as byproduct of nuclear weapons, it is not sold in the marketplace and instead is transferred directly to other agencies or sold publicly at auction. Theoretically, if it were traded in a free marketplace, the supply and demand would be mediated by the price, leaving the allocation to be based on willingness to pay. However, due to the unique market arrangement for helium-3, the price is much lower than the marginal cost of supply which leads to a higher demand than supply. As you can see from the graph below, there has been a steady and significant decline in our existing helium-3 supply.


Since 2001, U.S. helium-3 supply has declined dramatically

The supply of helium is now being allocated by an interagency policy committee which assesses national needs. As a result, a set of public policy issues arise: (1) whether or not to increase supply and how; (2) whether or not to decrease demand and how; (3) whether the current process of allocating existing supplies is acceptable and in the public’s best interest; and (4) whether an alternative process for allocating existing supplies is needed (Shea and Morgan 2010).


As stated before, the main source of helium-3 in the United States is the federal government’s nuclear weapons program. An isotope called tritium is used to make warheads and overtime this decays into helium-3 and once it decays, the tritium must be replaced. Because helium is a byproduct of this process, the supply is not determined by the demand for helium but by the demand for tritium by the weapons program. In a sense, in order to increase our supply of helium we would have to increase our production of nuclear weapons. The problem is there are limits on our weapons productions due to treaties.

The demand for helium-3 has increased dramatically since 2001. Prior to 2001, the demand was approximately 8,000 liters per year, which was less than the new supply from tritium decay.  After 2001, the demand increased, reaching approximately 80,000 liters in 2008 (Shea and Morgan). As you can see from the chart below, demand is projected to continue exceeding supply for the next several years.  


Decreasing demand is also not an easy thing to do. One way would be trying to find technological alternatives. Some technologies look promising like ones used for neutron detection. Even though there are promising alternatives, implementation of these technologies would likely present new or undetected challenges.


Government policymakers must now face the tough decisions of how to allocate the resource of Helium which has such scarcity. What should be the priority? Should it be security or science? The public sector or the private sector? Do we attempt to increase supply, or decrease demand, and how? These questions are not the only challenge as there are many applications of Helium with unique needs. For example, some types of cryogenic research can only be accomplished using helium-3, whereas in medical imaging and neutron detection, Helium-3 has advantages but also alternatives (Shea 2010). The challenge comes in making the right decisions of where and how much Helium to use in a time of shortage and scarcity. In the long run, we also face the task about how or whether to increase supply or reduce demand of Helium-3 and about possible alternative methods for allocating the resource. Either way the best approach will likely require many combinations of policy methods.


Works Cited

Shea, Dana A., and Daniel Morgan. “The Helium-3 Shortage: Supply, Demand, and Options for Congress.” Congressional Research Service.  n. page. Web. 12 Apr. 2013. <http://assets.opencrs.com/rpts/R41419_20100921.pdf&gt;.


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